Russia is poised to reveal a further cut to its estimate for winter grain sowings, as farmers continue to grapple against the worst drought on record, SovEcon has said.

The Moscow-based analysis group, which is well connected within Russia's agricultural sector, said that it "has learned" that the farm ministry is to unveil a fresh estimate of 15m hectares.

The figure is lower than the 16m-17m hectare estimate unveiled by Sergei Korolyov, deputy agriculture minister, two weeks ago, and a decrease of 3.8m hectares – an area the size of the Netherlands or Taiwan – on the initial target.

And even this downgrade may not be the last, with SovEcon revealing that its own estimate was for winter grain plantings of 14.8m hectares.

'Not sprouted'

Although the pace of sowings was "gaining momentum", reaching 8.1m hectares by September 21, it remained 3.1m hectares behind last year's.

Indeed, while conditions had "notably improved" in the centre of European Russia, they remained poor along the Volga river, an area particularly badly affected by the drought, where SovEcon said it expected seedings to fall "notably".

Even those crops that had been sown had fared badly.

"Due to low soil moisture content winter grains in that part of Russia either have not sprouted at all, or the sprouts are rather weak," the analysis group said.

"In the Volgograd region the area will shrink due to the drought. It may also decline in the Rostov region, where the winter sowing campaign started late this year," it added.

Winter vs spring

A slump in winter sowings would not spell another crop disaster for Russia, after drought which has slashed grain production by nearly 40%, to about 60m tonnes, this year.

Farmers have the alternative of planting in the spring, provided conditions improve over the next six months or so.

However, yields of spring crops are typically lower than their winter-planted counterparts by about 15-20%, although potentially offering improved quality, making it more difficult for Russia to reach a farm ministry target of production 85m-90m tonnes next year, and potentially delaying the country's re-emergence as a force in export markets.

There has been renewed talk in the US that Russia, the main world's third-ranked wheat exporter in 2009-10, may lift ban on shipments after assessing the size of this year's harvest - rumours behind a fall in Chicago prices on Tuesday, according to Mike Mawdsley, at US broker Market 1.

The curbs are due to last until December 31.

'Far from solved'

The level of Russian grain sowings is, with prospects for crops in southern hemisphere producers Argentina and Australia, one of the most closely-watched factors in grain markets worldwide.

On Wednesday, Luke Mathews at Commonwealth Bank of Australia noted that "while portions of Russia's drought affected cropland has received some rain, allowing improved planting prospects… the Russian issues are far from solved and much more rain is needed".

In Singapore, Ker Chung Yang at Philip Futures questioned whether the fall in wheat prices on Tuesday signalled that "fears about crop problems due to a weekend freeze in Canada and dryness in Russia and Western Australia are priced into the markets".

In Chicago, December wheat stood 1.3% higher at $7.27 Ѕ a bushel at 08:45 GMT.

In Europe Paris's November futures contract opened 0.1% highera t E231.50 a tonne, with London feed wheat for November unchanged at Ј167.50 a tonne.
 

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